How Did Texas Instruments Fare In Q2’16 Earnings?
Leading analog chipmaker Texas Instruments (NYSE:TXN) announced its Q2’16 earnings on July 25th. The company’s analog segment revenues declined slightly due to weakness in the personal electronics markets. This can be attributed to a decline in the sales for the major smartphone maker Apple, whose sales have likely declined again in Q2, after it plunged for the first time in Q1. TI derives approximately 10% of its revenues from Apple, which is its single largest customer.
Nevertheless, the company saw strong demand from automotive, industrial and communication markets. TI witnessed a strong growth of around 9% in the embedded processing segment, on the back of a healthy demand of embedded processors in the automotive segment and a recovery in communication infrastructure spending. Furthermore, even though the company’s analog segment revenues declined slightly, its operating profit for the segment increased due to lower manufacturing costs. TI’s gross profit margin in the quarter stood at 61.2%, which is an increase of 300 basis points from a year ago period. Going ahead, the company should continue to benefit from an efficient manufacturing strategy, which includes shifting to 300mm analog production and purchasing assets ahead of demand.
Below we look at the key metrics as reported by the company for Q2:
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